U.S. financial market indexes showed mixed results in the first trading day of the year. The Dow Jones Industrial Average was up 0.04% while the S&P 500 ended the day down 0.06%. For the week both indexes finished in negative territory as investors sold stocks in the final days of the year. The DJIA was down 1.26% for the January 2, 2015 week while the S&P 500 ended the week 1.49% lower. Despite the end of the year selloff both indexes finished with strong gains for the 2014 year. The DJIA reported an annual gain of 7.5% and the S&P 500 gained 11.4% for the year.
The Institute for Supply Management’s December manufacturing report was the highlight for the shortened week, which included limited activity due to holiday market closes. The major market moving report for the week showed slightly lower than expected growth in the U.S. economy also adding downward pressure on market valuations for the week. The ISM’s December Purchasing Managers Index was at 55.5%. This reading was down 3.2% from November and below economists’ consensus range expectation of 56.3% to 58.7%. All PMI categories were lower for the month except the Employment Index which reported an increase of 1.9% from November. The decline in new orders, production, inventories and prices could indicate slower growth occurring in the economy overall than economists are expecting.
For the week, JPMorgan Chase (JPM, Financial) was the only stock in the DJIA to report a weekly gain. For the January 2 week JPMorgan was up 0.54%. In the S&P 500 all sectors reported weekly losses with the technology sector showing the greatest decline at -2.48%.
Market indexes are now awaiting next week’s employment data which is a key factor in the Federal Reserve’s decision to increase the federal funds rate. On Wednesday, the ADP employment report is expected to show a private sector employment increase of approximately 235,000 jobs. On Friday, the Bureau of Labor Statistics’ employment report is forecast to show an increase of approximately 245,000 nonfarm payroll jobs with the unemployment rate likely decreasing to 5.7%. Additionally, on Wednesday of next week the Federal Open Market Committee will release its minutes for the December meeting which could also provide more insight on the FOMC’s timing for an interest rate increase.
